ORDER GRANTING DEFENDANT’S CONVERTED MOTION FOR SUMMARY JUDGMENT
I. INTRODUCTION
Plaintiffs Fresno Motors, LLC and Selma Motors, Inc. (collectively, “Plaintiffs”) brought this action against Mercedes-Benz USA, LLC (“MBUSA”), alleging that MBUSA tortiously interfered with Plaintiffs’ contractual right to purchase the assets of Mercedes-Benz of Fresno, a local Mercedes-Benz dealership (“Fresno Dealership”), from Asbury Fresno Imports, LLC (“Asbury”). (Dkt. No. 1.) In the operative First Amended Complaint (“FAC”), Plaintiffs allege that it executed an Asset Purchase Agreement (“APA”) with Asbury to acquire certain assets in Asbury’s Fresno Dealership, including As-bury’s leasehold interest in the dealership
Based on these allegations, Plaintiffs assert five causes of action against MBUSA under California law: (1) intentional interference with existing contractual advantage; (2) intentional interference with prospective economic advantage; (3) unfair and deceptive business acts and practices under California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof.Code §§ 17200, et seq.; (4) violation of California Vehicle Code section 11713.3(t); and (5) fraudulent concealment. (Dkt. No. 23.) Plaintiffs request, inter alia, compensatory, statutory, and punitive damages as well as restitution. (FAC, Prayer.)
On November 18, 2011, MBUSA filed its renewed motion to dismiss the FAC pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Dkt. No. 29.) The Court converted the motion to a summary judgment motion under Rules 12(d) and 56 because the Court determined that the material facts of the case were undisputed, the success of Plaintiffs’ claims hinged on determination of legal issues, and additional evidence, where needed, could be submitted without further discovery. (Ct. Order, Dkt. No. 52, Jan. 12, 2012.) Presently before the Court is MBUSA’s converted summary judgment motion, filed on February 3, 2012. (Dkt. No. 56.) After considering the undisputed evidence presented by the parties and the arguments of their counsel, the Court concludes that summary judgment is warranted in favor of MBUSA on all of Plaintiffs’ claims.
II. BACKGROUND
This suit arises out of Plaintiffs’ unsuccessful attempt to purchase the Fresno Dealership from Asbury pursuant to the APA. Mercedes-Benz, a Delaware corporation licensed by the California Department of Motor Vehicles, is a subsidiary of Daimler AG and distributes Mercedes-Benz vehicles manufactured by Daimler AG. (FAC ¶3 & Exh. A[APA], Appx.)
A. Dealer Agreements
Prior to the events underlying this action, Asbury entered into the Dealer Agreements with MBUSA on January 1, 2007. (PCDA; LTDA.) The agreements were valid from the date of execution to December 31, 2011. (PCDA, at vi; LTDA, at vi.) As an appointed Mercedes-Benz dealer, Asbury had a nonexclusive right to buy and resell Mercedes-Benz vehicles. (PCDA, at ii; LTDA, at ii.) The scope of Asbury’s other functions, as an authorized dealer, also included the servicing, rental, and leasing of Mercedes-Benz vehicles; use and display of Mercedes-Benz marks and products; and financing or insurance services. (PCDA, at 37; LTDA, at 37.) The agreements further incorporated standard provisions that furnished detailed guidance regarding the parties’ rights and obligations as to the acquisition, delivery, and inventory of Mercedes-Benz vehicle products; the dealer’s marketing and sales of Mercedes-Benz vehicles; the dealer’s service obligations, along with MBUSA’s obligations to provide service manuals and materials and field personal assistance; the dealer’s service and parts organization requirements; the dealer’s customer satisfaction obligations; the dealer’s location and facilities requirements; MBUSA’s warranty obligations; the dealer’s financing, capital, and accounting requirements; and the dealer’s sales reporting requirements. (PCDA, at 1-20; LTDA, at 1-20.) Moreover, the agreements permitted MBUSA to monitor the dealer’s performance by periodically evaluating the dealer’s sex-vice and parts performance, the dealer’s customer satisfaction performance, and the dealer’s facilities as well as by inspecting the dealer’s accounts and records on a reasonable basis. (PCDA, at 12-15,19-20; LTDA, at 12-15,19-20.)
The agreements additionally specified the terms and conditions for assignment. The dealer could not transfer ownership of
MBUSA has a right of first refusal or option to purchase such assets or ownership interest, including any leasehold interest or realty. MBUSA’s exercise of its right or option under this Section IX.B supersedes Dealer’s right to transfer its interest in, or ownership of, the dealership.... If Dealer has entered into a bona fide written buy/sell agreement for its dealership business or assets, MBUSA’s right under this Section IX.B is a right of first refusal, enabling MBUSA to assume the buyer’s rights and obligations under such buy/sell agreement, and to cancel this Agreement and all rights granted Dealer.
(PCDA, at 21, 22; LTD A, at 21, 22.) Concomitant with its right of first refusal, MBUSA was permitted to assign its right or option: “MBUSA’s right or option may be assigned by it to any third party and MBUSA hereby guarantees the full payment to Dealer of the purchase price by such assignee.” (PCDA, at 21; LTD A, at 21.)
B. Lease Agreement
Asbury operated the Fresno Dealership on premises that it leased from the Landlord under the Lease Agreement for a term of fifteen years, beginning on April 1, 2003. (Young Decl., Exh. 13 [Lease].) Asbury also had two ten-year renewal options under the Lease. (Id. at 2, sec. 1.13.) The Lease listed Asbury as the “Tenant” and the “Guarantor.” (Id. at 1, sec. 1.4.) The Lease further provided that Asbury could not assign or sublease the Fresno Dealership premises without the Landlord’s prior written consent except under certain conditions. (Id. at 10, sec. 7.1.) The Landlord’s consent to any assignment or sublease, however, could not be construed as:
(i) waiving or releasing Tenant from any of its liabilities or obligations under this Lease as a principal, (ii) waiving or releasing Guarantor from its obligations under the Guaranty, or (iii) as relieving Tenant or any assignee or subtenant from the obligation of obtaining Landlord’s prior written consent to any subsequent Assignment or Sublease.
(Id. at 11, see. 7.2.)
C. Asset Purchase Agreement
Asbury and Selma Motors executed the APA on March 27, 2009, for the sale of certain assets in the Fresno Dealership, including Asbury’s leasehold interest under the Lease Agreement. (APA.) The APA provided that Asbury would either (a) assign the lease to Selma Motors or (b) execute a sublease. (APA, at 3, sec. 2.05.) Specifically, section 2.05 of the APA states that at the closing, Asbury (the Seller) shall deliver, and Selma Motors (the Buyer) shall accept, a leasehold interest in the leased real property of the Fresno Dealership premises as follows:
by either (the manner to be chosen in the sole discretion of the Seller): (a) an assignment to the Buyer of all right, title and interest in the Lease (with terms and conditions reasonably satisfactory to the Seller to the extent such terms and conditions apply to, or otherwise affect, such Seller, but including the full release of the Seller and/or its Affiliates) (the “Lease Assignment”), or (b) execution and delivery of a sublease for such leased real property in favor of the Buyer (with terms and conditions reasonably satisfactory to the Seller, but including a personal guarantee of the Buyer’s principal and such principal’s spouse securing the obligations of the Buyer under such sublease) (the “Sublease”). The Lease Assignment or the*1287 Sublease, as the case may be, will be on a pass through basis such that the Buyer will be subject to the same terms and conditions in the Lease as in effect as of the date of this Agreement, without modification (except for the change contemplated in Section 7.0k )•
(Id.) Selma Motors’ obligation to purchase the dealership assets was subject to several conditions, including approval from MBUSA and consent from the Landlord:
Section 7.03 Manufacturer Approval. The Manufacturer shall have approved the Buyer as an authorized dealer of its products.
Section 7.04 Landlord Consent. The landlord under the Lease shall have consented in writing to the Lease Assignment or the Sublease, as selected by the Seller as contemplated in Section 2.05....
(Id. at 7.) Similarly, Asbury’s obligation to sell the dealership assets was subject to several conditions, including consent and release from MBUSA, assignment and assumption of liabilities by Selma Motors, and consent from the Landlord:
Section 8.03 Manufacturer Consent and Release. The Seller shall have obtained the Manufacturer’s consent to terminate the Seller’s existing dealership agreement with the Manufacturer, the Manufacturer’s consent to releasing the Seller from all obligations under the Seller’s existing dealership agreement with the Manufacturer, and the Seller terminating the Seller’s existing dealership agreement with the Manufacturer. Section 8.04 Assignment and Assumption. The Buyer executing and delivering to the Seller, on or before the Closing Date, an assignment and assumption agreement for the Assumed Liabilities, in a form reasonably acceptable to the parties.
Section 8.06 Landlord Consent. The landlord under the Lease shall have consented in writing to the Lease Assignment or the Sublease, as selected by the Seller as contemplated in Section 2.05.
(Id.) The termination date of the APA was initially set for April 17, 2009. (Id. at 11-12, secs. 11.01(b), (c), (g).) This date was extended to June 15, 2009 by a first, second, and third amendment to the APA. (FAC, Exhs. B-D; Nelson Decl. ¶¶ 5, 9, 10 & Exhs. B-D; UF Nos. 3, 7, 8.)
Subsequent to executing the APA, Selma Motors assigned its rights and obligations under the APA to Fresno Motors. (FAC ¶ 19 & Exh. C [2nd Am. to APA]; Nelson Decl. ¶ 9 & Exh. C [same]; UF No. 7.) In the assignment, the parties (which included Asbury, Selma Motors, and Fresno Motors) agreed to the following:
Assignment to New Buyer. The parties agree that Selma Motorsf] rights under the Agreement are hereby assigned to the New Buyer, and the New Buyer shall be subject to the same obligations as Selma Motors as the Buyer under the Agreement. All references to the Buyer in the Agreement shall mean the New Buyer. Notwithstanding the foregoing, the assignment and assumption of the Buyer’s rights and obligations under the Agreement by the New Buyer shall not operate as a release of Selma Motors of its obligations as the Buyer under the Agreement.
(2nd Am. to APA.)
D. Right of First Refusal and Acknowledgement Agreement
Pursuant to the Dealer Agreements, MBUSA had a contractual right of first refusal or option to purchase the Fresno Dealership assets that superseded As-bury’s right to transfer interest or ownership of the dealership. (PCDA, at 21, 22; LTDA, at 21, 22; see also supra Part 11(A).) MBUSA also had a statutory right
On or about June 15, 2009, MBUSA notified Asbury and Selma Motors of its exercise of first refusal by sending a letter to Asbury and Selma Motors via facsimile and overnight delivery. (FAC, Exh. E [Letter]; Nelson Decl. ¶¶ 13, 15 & Exhs. F-G; UF Nos. 11, 13.) MBUSA stated that pursuant to its Dealer Agreements with Asbury and Vehicle Code sections 11713.3 et seq., it was exercising its right of first refusal with respect to the APA and would “purchase the assets of the Fresno Dealership as more fully set forth in the terms and condition of the Sale Agreement on the same terms and for the same consideration as set forth in the Sale Agreement.” (Letter.)
On June 19, 2009, MBUSA and Asbury entered into an “Acknowledgment of and Agreement with Respect to Exercise of Right of First Refusal.” (“Acknowledgement Agreement” or “Ack. Agrmt.”). (FAC, Exh. F [Ack. Agrmt.]; Nelson Decl., Exh. T [same]; Burkhalter Deck, Exh. E [same].)
Terms of Exercise. MB acknowledges that by its exercise of its right of first refusal, MB will be subject to the same terms and conditions under the Fresno Motors APA as such terms and conditions apply to Fresno Motors. Further, any subsequent assignment by MB of its rights or obligations under any or all of the Fresno Motors APA and the Purchase Documents, including, without limitation, the Sublease, shall not operate as a release of MB of its obligations under such agreements. For avoidance of doubt, MB expressly agrees that it shall be primarily responsible for the performance under the Fresno Motors APA and the Sublease. Asbury acknowledges that MB may assign its rights and obligations under the Fresno Motors APA and the Sublease to a third party provided that MB remain primarily responsible for the performance of any such assignee with respect to the Fresno Motors APA and the Sublease.
(Id.; see also UF No. 51.) The agreement further provided that Asbury would terminate the APA with respect to Fresno Motors, but that such termination “will not be deemed a termination of the Fresno Motors APA as such terms and conditions now apply to MB as a result of its exercise of its right of first refusal as well as to any proposed assignee of MB,” and that “MB will continue to be bound by the terms and conditions under the Fresno Motors APA as if it were an original party to same as a buyer.... ” (AckAgrmt.) Asbury sent a copy of the Acknowledgement Agreement to Plaintiffs on August 31, 2009, in the midst of Fresno Motors’ renegotiations with MBUSA and Asbury to purchase the Fresno Dealership as MBUSA’s assignee. (FAC ¶ 59; Nelson Deck ¶ 33; Burkhalter Deck ¶ 8; UF No. 31.)
E. Mediation and Termination
Asbury terminated the APA with Plaintiffs on June 19, 2009. (FAC ¶ 46; Nelson Deck ¶ 16, Exh. H [Term. Letter]; UF No. 14.) Fresno Motors subsequently objected to MBUSA’s exercise of its right of first refusal as untimely and unlawful. (FAC ¶ 49; Nelson Deck ¶ 17.) In an effort to resolve the dispute, MBUSA voluntarily
Mr. Nelson should provide to Asbury whatever additional documentation, if any, it requires to secure approval of the sublease!.]
Fresno Motors will need to agree on and sign an assignment and assumption agreement, by which MBUSA will convey its interest under its exercise of its ROFR to Fresno Motors as assignee; Fresno Motors will then close with As-bury as the buyer.
(July 30, 2009 Email.) MBUSA and Fresno Motors negotiated and finalized an Assignment and Assumption Agreement (“Assignment”) for Mr. Nelson’s signature, which was transmitted to Fresno Motor’s counsel on August 28, 2009. (FAC ¶ 56; Burkhalter Decl. ¶ 9 & Exh. F [Aug. 25, 2009 Email]; Young Decl. ¶¶ 3, 9, Exhs. 1 [Aug. 30, 2009 Email & Assign. Agrmt.], 2 [Aug. 28, 2009 Email], 10 [Sept. 17, 2009 Email].) However, Fresno Motors did not sign the Assignment. (FAC ¶ 61 & Exh. H [Findings & Rec. re Arbit.], at 3.)
Negotiations reached an impasse when MBUSA would not provide the Landlord with a guarantee of Fresno Motors’ obligations under the sublease. (FAC ¶¶ 53-55, 102-105; Nelson Decl. ¶ 81; UF No. 29.)
On December 9, 2009, Fresno Motors initiated arbitration proceedings against Asbury and MBUSA. (Findings and Rec. re Arbit., at 3.) Asbury agreed to submit to arbitration while MBUSA declined to do so. (Id.) On December 31, 2009, Fresno Motors filed a petition to compel arbitration against MBUSA in the Eastern District of California (Case No. l:10-cv00012), based on the arbitration provision under the APA. (Id.; Pis.’ Req. Jud. Not., Exh. 1 [Arbit. Pet.].)
F. Procedural History
On September 8, 2011, Plaintiffs brought the instant action against MBUSA in the Northern District of California. (Dkt. No. 1.) Plaintiffs filed the FAC on November 4, 2011. (Dkt. No. 23.) On November 18, 2011, MBUSA filed a renewed motion to dismiss the FAC pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Dkt. No. 29). On November 30, 2011, the case was transferred to the Eastern District of California, Fresno Division, by the parties’ stipulation and court order. (Ct.Order, Dkt. No. 32, Nov. 30, 2011.)
On January 12, 2012, the Court converted MBUSA’s renewed motion to dismiss to a motion for summary judgment. (Ct.Order, Dkt. No. 52, Jan. 12, 2012.) The Court gave notice of the converted motion to the parties and afforded the parties the opportunity to submit additional evidence in support of their claims. (Id.) The Court ordered MBUSA to file a supplemental response by February 3, 2012, and ordered Plaintiffs to submit a supplemental opposition by February 10, 2012. (Id.) The Court also permitted MBUSA to submit a supplemental reply no later than February 17, 2012. (Id.) Hearing on the converted summary judgment motion was set for February 24, 2012 at 9:00 a.m. (Id.) In their responses, the Court specifically requested that the parties include briefing and additional evidence related to whether Plaintiffs can prove fraudulent concealment, particularly with regarded to the following issues: (1) whether MBUSA had a duty to disclose the contents of the Acknowledgement Agreement and (2) whether “but for” MBUSA’s failure to disclose the Acknowledgment Agreement to Plaintiffs, Plaintiffs would not have engaged in negotiations with the Landlord of the Fresno Dealership premises. (Id.)
On February 3, 2012, MBUSA timely filed its converted summary judgment motion. (Dkt. No. 56.) The parties then stipulated to a two-week extension for Plaintiffs to file their opposition to the converted summary judgment motion and to continue the hearing, (Dkt. No. 57), which the Court granted. (CtOrder, Dkt. No. 60, Feb. 9, 2012.) Plaintiffs concurrently filed an ex parte application to extend the time for discovery and present facts under Federal Rule of Civil Procedure 56(d). (Dkt. No. 58.)
III. LEGAL STANDARD
The Court may grant summary judgment on “each claim or defense — or the part of each claim or defense — on which summary judgment is sought.” Fed. R. Civ.P. 56(a). The Court may award summary judgment where the pleadings, the discovery and disclosure materials on file, and any affidavits show that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Id.; see also Celotex Corp. v. Catrett,
The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp.,
In considering a motion for summary judgment, the Court’s function is not to weigh the evidence and determine the truth of the matter or make credibility determinations, as those are jury functions. Anderson, 477 U.S. at 255,
IV. DISCUSSION
A. Tortious Interference
Plaintiffs assert that MBUSA tortiously interfered with Plaintiffs’ contractual relationship with Asbury and their prospective economic advantage in the Fresno Dealership. (FAC ¶¶ 68-84.)
The Court finds that under California law, as recognized by the Ninth Circuit, a claim for tortious interference of contract and prospective economic advantage may only lie against “strangers” or interlopers who do not have a direct and significant interest in the plaintiffs contractual relationship with another individual or entity. The Court disagrees with Plaintiffs that a nonparty to a contract is automatically subject to a tortious interference claim. Rather, the Court finds that a tortious interference claim cannot also lie against a nonparty who has a direct economic interest and involvement in the contractual relationship. The not-a-stranger principle, as applied to MBUSA under the undisputed facts, show that MBUSA had a substantial, continuing economic interest and necessary involvement in the APA that was contractually recognized and statutorily protected.
1. Not-A-Stranger Principle
In Applied Equipment, the California Supreme Court addressed the issue of whether a party to a contract could be
The California Supreme Court based its decision, in part, on precedent and longstanding policy, including the “underlying policy of protecting the expectations of contracting parties against frustration by outsiders who have no legitimate social or economic interest in the contractual relationship” and the principle that “[t]he tort duty not to interfere with the contract falls only on strangers — interlopers who have no legitimate interest in the scope or course of the contract’s performance.” Id. at 514,
Although Applied Equipment was not specifically cited in Marin Tug, the Ninth Circuit in Marin Tug also invoked and applied the not-a-stranger principle in deciding whether the wrongfulness element of the claim for tortious interference with prospective economic advantage was satisfied. In that case, Marin Tug and Barge Inc., a barge company that transported oil, entered into a contract with a petroleum company that brokered fuel, under which one of Marin Tug’s barges (the “Tenor”) was loaded with oil at Shell Oil’s refinery. Marin Tug,
Closely intertwined with the not-a-stranger principle is the fundamental precept that a nonparty to a contractual relationship who nevertheless has a sufficiently direct economic stake in that relationship has a right to protect its own economic interest. See Marin Tug,
2. Woods v. Fox Broadcasting Sub., Inc.
Plaintiffs do not contest that MBUSA had a direct economic interest or involvement in the APA or in the business relationship between Plaintiffs and Asbury. Rather, Plaintiffs argue that MBUSA has misinterpreted the not-a-stranger principle under Applied Equipment in light of the purported clarifications of the case by the California appellate court in Woods. Plaintiffs argue that Applied Equipment and Woods support the proposition that because MBUSA was admittedly a nonparty to the APA between Plaintiffs and As-bury, it is necessarily a stranger, such that
The California appellate court in Woods revisited Applied Equipment and criticized the application of the not-a-stranger principle in Marin Tug. In Woods, the plaintiffs, officers and employees of Fox Family Worldwide, Inc. (“Fox Family”), brought suit against the company’s major shareholder in connection with the sale of the company. Woods,
The appellate court reversed the trial court’s decision, finding “it highly unlikely that Applied Equipment intended to hold, or should be construed as holding, that persons or entities with an ownership interest in a corporation are automatically immune from liability for interfering with their corporation’s contractual obligations.” Id. at 353,
While this Court agrees with the Woods court that the issue before the Applied Equipment court concerned liability of a party for interfering with its own contract, the Court does not believe that the phrase “outsiders who have no legitimate social or economic interest in the contractual relationship” was only dicta or an arbitrary turn of the phrase used by the California Supreme Court. The Applied Equipment court based its holding on a longstanding underlying policy, as noted by the Ninth
Likewise, the Woods court minimized the Ninth Circuit’s observations of the not-a-stranger principle in Mann Tug and read that case as being limited to an evaluation of the wrongfulness element of the claim for tortious interference with prospective economic advantage. Woods,
The Woods court and Plaintiffs further point to a caveat raised by the California Supreme Court in Applied Equipment. In holding that a party to a contract could not be liable for tortious interference, the California Supreme Court noted the following: “Nothing we have said suggests that Litton may not be held liable for direct interference with the Applied/Varian purchase order (to which it was not a party) or that Varían may not be held liable for direct interference with the Applied/Litton subcontract (to which it was not a party), provided that each of the elements of the tort of interference with contract is satisfied.” Applied Equipment,
Based on its reading of Applied Equipment, the Woods court determined that Applied Equipment did not overrule the line of cases that owners or officers of a business entity could be held liable for interference with that entity’s contracts, subject to the defense of privilege. Id. at 353,
3. MBUSA’s Direct Interest and Involvement
MBUSA argues that it was not a stranger to the contractual relationship between Plaintiffs and Asbury for three reasons: (1) the entire purpose of the APA was to transfer Asbury’s Fresno Dealership assets to Plaintiffs, who would then sell and service vehicles purchased from MBUSA and operate under dealer agreements with MBUSA, provided that MBUSA approved Fresno Motors as its authorized dealer; (2) a “symbiotic economic relationship” necessarily existed between MBUSA (distributor) and As-bury/transferee (dealer); and (3) MBUSA had a preexisting contractual right to interfere with the APA, based on the right of first refusal provision in the Dealer Agreements with Asbury and MBUSA’s right to review and approve any transfer of the Fresno Dealership. (Id. at 11-12.) Plaintiffs do not offer any argument or evidence controverting MBUSA’s significant, economic interest in the relationship between Asbury (MBUSA’s existing dealer) and Plaintiffs (a prospective new one). Plaintiffs only contend that the three grounds proffered by MBUSA for why it was not a stranger to the APA still does not change the fact that it was a nonparty to the APA. (Pis.’ Opp’n, at 14-15.) As explained above, however, MBUSA’s status as a nonparty does not necessarily mean that it is subject to a claim for tortious interference. While “[i]t is axiomatic ... that there can be no action for inducement of breach of contract against the other party to the contract,” Shoemaker v. Myers, 52 Cal.3d 1, 24,
Based on the undisputed facts, the Court finds that MBUSA had a substantial, continuing economic interest and necessary involvement in the APA between Asbury and Plaintiffs, such that it was not a stranger to their contractual relationship. It is uncontested that Fresno Motors could not purchase Asbury’s assets of the Fresno Dealership under the APA without MBUSA’s written approval, consent, and release. The APA expressly required, on or before the closing date, that Selma Motors (and later Fresno Motors as the assignee) obtain MBUSA’s approval to be the authorized dealer of Mercedes-Benz vehicles. (APA, at 7, sec. 7.03.) In fact, the extent of MBUSA’s role, as the manufacturer/distributor in approving or disapproving a prospective dealer, is codified and regulated under Vehicle Code sections 11713.3(d)(2)(A), (B). As Plaintiffs allege, Plaintiffs had to communicate with and submit application materials to MBU-SA in the process of obtaining approval as an authorized Mercedes-Benz dealer. (FAC ¶¶ 8, 13-15.) The APA also included, as a condition precedent, that Asbury obtain MBUSA’s consent and release of its existing Dealer Agreements with MBUSA. (APA, at 7, sec. 8.03.) Thus, MBUSA’s involvement was both necessary and integral to the consummation of the transaction contemplated by Plaintiffs and Asbury under the APA.
It is also uncontested that Plaintiffs’ entire purpose of entering into the APA was to purchase Asbury’s assets of the Fresno Dealership and thereby sell and service Mercedes-Benz vehicles as an authorized dealer of MBUSA. The closing of the APA would then, in effect, create a continuing manufacturer-dealer relationship between MBUSA and Fresno Motors with certain duties and rights flowing to each under their dealership agreements and the California Vehicle Code. For example, pursuant to the standard provisions incorporated in MBUSA’s dealer agreements, the parties would have to adhere to detailed guidelines regarding the acquisition, delivery, and inventory of Mercedes-Benz vehicle products; the dealer’s marketing and sales of Mercedes-Benz vehicles; the dealer’s service obligations, along with MBUSA’s obligations to provide service manuals and materials and field personal assistance; the dealer’s service and parts organization requirements; the dealer’s customer satisfaction obligations; the dealer’s location and facilities requirements; MBUSA’s warranty obligations; the dealer’s financing, capital, and accounting requirements; and the dealer’s sales reporting requirements. (PCDA, at 1-20; LTDA, at 1-20.) The dealer agreements would also enable MBUSA to monitor the dealer’s performance by periodically evaluating the dealer’s service and parts performance, the dealer’s customer satisfaction performance, and the dealer’s facilities as well as by inspecting the dealer’s accounts and records on a reasonable basis. (PCDA, at 12-15, 19-20; LTDA, at 12-15, 19-20.) As true of the manufacturer-distributor relationship, a “symbiotic economic relationship” would necessarily exist between MBUSA and Fresno Motors. (See Def.’s Mem. in Supp. Mot. to Dismiss, at 11-12; see also PCDA at 36 & LTDA at 37 (“This Agreement is entered into by and between MBUSA and Dealer for their sole and mutual benefit.”); PCDA at 6-7 & LTDA at 7 (“Dealer and MBUSA agree that customer satisfaction and the future growth of their respective businesses is substantially dependent upon the ability of owners of Mercedes-Benz [passenger cars/light trucks] to obtain high-quality servicing from Dealer.”).) As true of MBUSA’s and Asbury’s business relationship, MBUSA would need to depend on Fresno Motors’ performance in
The factual circumstances of Marin Tug are also instructive here. In holding that Marin Tug and its owners could not show some unlawful element to satisfy the requisite wrongfulness element for their tortious interference claim, the Ninth Circuit noted the following: “Shell’s actions were, at bottom, simply a refusal to deal with Marin Tug, and therefore presumptively valid ... absent some unlawful element,” and that it was “not dissuaded from this conclusion by the fact that in some instances the actual contracts were between Marin Tug and the buyer, not with Shell. Such contracts, no less than those in which Marin Tug contracted directly with Shell, required direct, active involvement by Shell-the loading of Shell oil onto Marin Tug’s barges.” Id. at 834 (emphasis added). “Because the economic relationship between Marin Tug and the buyer of any Shell oil shipped on Marin Tug’s barges depended] on Shell’s cooperation,” the Ninth Circuit found that “Shell is not easily characterized as a stranger to that relationship.” Id. Furthermore, the Ninth Circuit observed, as demonstrated by the underlying dispute giving rise to the lawsuit, Marin Tug and Shell had a “mutual economic interest in delivering the oil safely and cleanly, and were dependent upon each other to do so.” Id. “In this situation, there is nothing wrongful under California law about the means Shell chose to advance its interests, a simple refusal to deal -with Marin Tug or to load its oil on Marin Tug’s barges.” Id.
Likewise, here, MBUSA had a direct, active role in the contractual relationship between Plaintiffs and Asbury — the distribution of Mercedes-Benz vehicles to the Fresno Dealership for sale, lease, and maintenance. The contractual relationship between Plaintiffs and Asbury further depended on MBUSA’s cooperation, i.e., its explicit approval of Fresno Motors as an authorized Mercedes-Benz dealership and consent and release of Asbury’s Dealer Agreements under the APA. Moreover, as in Marin Tug, Asbury and MBUSA had a mutual economic interest in distributing and selling Mercedes-Benz vehicles to consumers and, as a distributor and dealer, were dependent on the other in furthering their economic interest.
There is yet another compelling reason for not viewing MBUSA as a stranger to the APA: MBUSA had a preexisting contractual and statutory right to interfere with that contract. Under MBUSA’s
Simply stated, MBUSA was not a stranger to the contractual relationship between Plaintiffs and Asbury. MBUSA is thus entitled to judgment as a matter of law with respect to the tortious interfer
B. Vehicle Code § 11713.3(t)
Plaintiffs request damages in connection with MBUSA’s alleged violation of section 11713.3(t) of the California Vehicle Code by its purported untimely and unlawful exercise of first refusal and its failure to reimburse them for certain expenses. (FAC ¶¶ 95-97.) At issue is whether Plaintiffs have standing to assert a claim under section 11713.3(t). MBUSA argues that Plaintiffs lack standing to bring a section 11713.3(t) claim because that section only applies to manufacturers and franchisees, and there is no private cause of action for nonlicensees, as evidenced by the express language of section 11726 of the Vehicle Code, other subdivisions of the Vehicle Code, and related legislative history materials. (Def.’s Mem. in Supp. Mot. to Dismiss, at 19-22.) Plaintiffs contend that they have a right of action as a prospective franchisee based on subdivision (t)(6) of section 11713.3, which requires reimbursement for certain expenses to “proposed transferee” of certain expenses, and attendant legislative history materials on section 11713.3(t). (Pis.’ Opp’n, at 17-21.)
Section 11713.3 renders certain conduct by licensed manufacturers and distributors unlawful. The statute provides in relevant part:
It is unlawful and a violation of this code for a manufacturer, manufacturer branch, distributor, or distributor branch licensed pursuant to this code to do, directly or indirectly through an affiliate, any of the following:
(t) To exercise a right of first refusal or other right requiring a franchisee or an owner of the franchise to sell, transfer, or assign to the franchisor, or to a nominee of the franchisor, all or a material part of the franchised business or of the assets of the franchised business unless all of the following [six enumerated] requirements are met.
(2) The franchisor gives written notice of its exercise of the right of first refusal no later than 45 days after the franchisor receives all of the information required pursuant to subparagraph (A) of paragraph (2) of subdivision (d).
(6) The franchisor shall reimburse the proposed transferee for expenses paid or incurred by the proposed transferee in evaluating, investigating, and negotiating the proposed transfer to the extent those expenses do not exceed the usual, customary, and reasonable fees charged for similar work done in the area in which the franchised business is located .... within 30 days of exercising the right of first refusal.
Cal. Veh.Code § 11713.3(t)(2), (6).
Here, Plaintiffs assert that MBUSA violated both paragraphs 2 and 6 of section 11713.3(t). A statutory violation, however, does not necessarily give rise to a private cause of action; rather, “whether a party has a right to sue depends on whether the Legislature has manifested an intent to create such a private cause of action under the statute.” Lu v. Hawaiian Gardens Casino, Inc.,
It is undisputed that Plaintiffs were not existing licensees, dealers, or franchisees of Mercedes-Benz vehicles or that they had any valid agreement with MBUSA. Instead, Plaintiffs were prospective transferees who entered into the APA with Asbury, an existing Mercedes-Benz dealer, to purchase Asbury’s assets in the Fresno Dealership. Nevertheless, Plaintiffs heavily rely on subdivision (t)(6) as evidence of the Legislature’s intent to create a private cause of action for prospective franchise dealers because subdivision t(6) expressly requires distributors to reimburse a “proposed transferee” for certain expenses. Plaintiffs’ reliance is misplaced.
A violation of subdivision t(6) by MBU-SA does not per se confer a cause of action on Plaintiffs. The language of subdivision t(6) neither explicitly states a private cause of action for a prospective transferee nor permits a prospective transferee to recover damages for a distributor’s failure to reimburse it for certain expenses. Moreover, while “proposed transferee” plainly means prospective assignees of a franchise or prospective franchisees, Plaintiffs’ reading is too narrowly focused and entirely disregards the context of the statutory provision. In interpreting a statute, the Court is guided by the Legislature’s intent, as evinced by the plain meaning of the statute’s words of the law. Cal. Teachers Ass’n v. Governing Bd. of Rialto Unified School Dist.,
Plaintiffs only myopically focus on subdivision (t)(6) — —specifically the term “proposed transferee” — without regard to section 11713.3(t) under which subdivision t(6) is subsumed or the section’s other provisions. Subdivision (t)(6) must be interpreted in the larger context of section 11713.3(t), which expressly prohibits a manufacturer or distributor from exercising a right of first refusal requiring “a franchisee or an owner of the franchise” to transfer “to the franchisor, or to a nominee of the franchisor” the assets of the franchised business without satisfying certain statutory conditions. Cal. Veh.Code § 11713.3(t) (emphasis added). The Vehicle Code defines a “franchise” as “a written agreement between two or more persons having all of the [five enumerated] conditions,” which confers on the franchisee the right to sell or lease new motor vehicles manufactured or distributed by the franchisor. Cal. Veh.Code § 331(a). A “franchisee” is defined as “any person
More importantly, Plaintiffs simply fail to account for section 11726, which must be read in conjunction with section 11713.3. See Gately v. Cloverdale Unified School Dist.,
Any licensee suffering pecuniary loss because of any willful failure by any*1306 other licensee to comply with any provision of Article 1 (commencing with Section 11700) ... of Chapter 4 of Division 5 ... or with any regulation adopted by the department or any rule adopted or decision rendered by the board under authority vested in them may recover damages and reasonable attorney fees therefor in any court of competent jurisdiction. Any such licensee may also have appropriate injunctive relief in any such court.
Cal. Veh.Code § 11726 (emphases added). Section 11726 creates a private right of action for licensed dealers and distributors to sue each other by expressly enabling a licensee to recover damages in a court of law. Here, the term “licensee” refers to already licensed dealers and manufacturers, not prospective licensees. See Cal. Veh.Code § 11700 (providing that no person shall act as a dealer, manufacturer, or distributor without having first been issued a license). The plain wording of sections 11713.3(t) and 11726 make it clear that a cause of action for damages extends only to franchisees or dealers with an existing agreement with a manufacturer or distributor, not to a prospective transferee. See Larry Menke,
The legislative history materials submitted by Plaintiffs do not support a different reading of subdivision (t). In fact, the materials only show that subdivision (t) was enacted to ensure further protection to existing and newly licensed dealers against manufacturers and distributors, not to prospective dealers or franchisees. In 1973, the Legislature enacted the “Automotive Franchise Act” to, among other things, “avoid undue control of the independent new motor vehicle dealer by the vehicle manufacturer or distributor and to insure that dealers fulfill their obligations under their franchises and provide adequate and sufficient service to consumers.” (Stats. 1973, c. 996, p. 1964, § 1; Pis.’ Req. for Jud. Notice, Exh. 7 [AB 2707 re Auto. Franchise Law].)
These legislative materials indicate that new measures were added to protect newly licensed dealers and consumers by, for example, requiring reasonable measures that manufacturers and distributors must satisfy to exercise them right of first refusal. There is no mention of prospective dealers, franchisees, or licensees, other than perhaps as an implied part of the larger consumer public, who may bring protests before the New Motor Vehicle Board under section 3050. Plaintiffs, however, do not purport to bring a claim for a Vehicle Code violation as part of the consuming public before the Board; rather, they seek to bring a private cause of action for damages.
If the Legislature meant to include prospective licensees as those protected under section 11726 or section 11713.3, it would have done so. It is not the Court’s role to second guess the intent of the Legislature when the express statutory language is clear on its face. See Calif. Teachers Ass’n,
C. Fraudulent Concealment
Plaintiffs allege that MBUSA, in concert with Asbury, committed fraudulent concealment by intentionally withholding and suppressing from Plaintiffs the Acknowledgment Agreement under which MBUSA promised to be “primarily responsible” for the performance of any assignee with respect to a sublease. (FAC ¶¶ 54, 103.) Plaintiffs allege that MBUSA knowingly concealed this information from Plaintiffs between July 31 and August 31, 2009, forcing Plaintiffs to incur additional, unneces
Under California law, the elements of fraudulent concealment are: (1) the defendant concealed or suppressed a material fact; (2) the defendant was under a duty to disclose the fact to the plaintiff; (3) the defendant intentionally concealed or suppressed the fact with intent to defraud the plaintiff; (4) the plaintiff was unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact; and (5) plaintiff was damaged by the concealment. Jones v. ConocoPhillips,
1. Concealment of Material Fact
The Acknowledgment Agreement states that “MB expressly agrees that it shall be primarily responsible for the performance under the Fresno Motors APA and the Sublease.” (Ack. Agrmt. (emphasis added).) Plaintiffs’ fraudulent concealment claim is predicated on the assertion that MBUSA somehow agreed in the Acknowledgment Agreement to provide a guarantee to the Landlord.
The dispute between the parties turns on the meaning of the term “primarily responsible” under the Acknowledgment Agreement. MBUSA argues that the promise to be “primarily responsible” for an assignee’s sublease means that MBUSA would indemnify Asbury in the event the assignee failed to meet its sublease obligations to Asbury, not that it would provide a guarantee to the Landlord of the assignee’s obligation under the sublease. (Def.’s Mem. in Supp. Mot. to Dismiss, at 23-24.) Plaintiffs insist that “[o]n its face, MBUSA’s promise is a guarantee,” (Pis.’ Opp’n to Mot. to Dismiss, at 22:15), and that “[t]here is no practical or legal difference between promising to be ‘primarily responsible for another person’s obligation to perform’ and guaranteeing that obligation,” (Pis.’ Supp. Opp’n, at 16:21-22). To resolve this issue, the Court must apply rules of contract interpretation under California law.
(i) Rules of Contract Interpretation
“The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties.” Bank of the W. v. Superior Court,
If the contract language is capable of two different reasonable interpretations, then the contract is ambiguous. Oceanside 84, Ltd. v. Fid. Fed. Bank,
(ii) “Primarily Responsible” for the Sublease
The first step in the analysis is to determine whether the term “primarily responsible” is ambiguous, i.e., reasonably susceptible to the interpretation that Plaintiffs urge — namely that MBUSA promised to provide a guarantee to the Landlord of all of Plaintiffs’ obligations under a sublease. Oceanside 84,
In determining whether a contract is reasonably susceptible to the interpretation that a party urges, the Court must look to the language of the contract as well as to extrinsic evidence of the parties’ intent. Oceanside 84,
It is undisputed that Asbury and MBU-SA executed the Acknowledgment Agreement on June 19, 2009, and that they were the only parties to the agreement. (Ack.Agrmt.) The Acknowledgment Agreement consists of two pages, with six full paragraphs on the first page and the parties’ signatures on the second. (Id.) The agreement is entitled “Acknowledgment of and Agreement with respect to Exercise of Right of First Refusal.” (Id.) The first paragraph indicates the date and the names of the contracting parties, Asbury and MBUSA. (Id.) The second paragraph provides background material on the APA, which was executed by Asbury and Fresno Motors (as assignee of Selma Motors) on March 27, 2009, and subsequently amended. (Id.) The third paragraph provides that “[o]n June 15, 2009, MB provided timely written notice to Asbury of its exercise of its right of first refusal with respect to the transactions contemplated in the Fresno Motors APA, and its intent to purchase substantially all of the assets of As-bury upon the same terms and conditions as set forth in the Fresno Motors APA.” (Id.) The paragraph continues and states that “[t]he parties now desire to acknowledge their respective rights and obligations with respect to such exercise of MB’s right of first refusal as follows,” and lists three such rights and obligations. (Id.) Under the fourth paragraph, subtitled “Terms of Exercise,” the agreement states the core provision that includes the term “primarily responsible”:
Terms of Exercise. MB acknowledges that by its exercise of its right of first refusal, MB will be subject to the same terms and conditions under the Fresno Motors APA as such terms and conditions apply to Fresno Motors. Further,*1311 any subsequent assignment by MB of its rights or obligations under any or all of the Fresno Motors APA and the Purchase Documents, including, without limitation, the Sublease, shall not operate as a release of MB of its obligations under such agreements. For avoidance of doubt, MB expressly agrees that it shall be primarily responsible for the performance under the Fresno Motors APA and the Sublease. Asbury acknowledges that MB may assign its rights and obligations under the Fresno Motors APA and the Sublease to a third party provided that MB remain primarily responsible for the performance of any such assignee with respect to the Fresno Motors APA and the Sublease.
(Ack. Agrmt. (emphases added).)
The first sentence of the cited paragraph repeats the previous statement that by exercising its right of first refusal, MBUSA “will be subject to the same terms and conditions under the Fresno Motors APA as such terms and conditions apply to Fresno Motors.” (Id. (emphasis added).) By exercising its right of first refusal, MBUSA stepped into the shoes of the buyer (Fresno Motors) and assumed all of its rights and obligations under the APA, including those under a sublease. This language repeats the language used in section 2.05 of the APA: “The Lease Assignment or the Sublease, as the case may be, will be on a pass through basis such that the Buyer will be subject to the same terms and conditions in the Lease as in effect as of the date of this Agreement. ...” (Id. (emphasis added).)
The cited paragraph from the Acknowledgment Agreement goes on to provide that in the event MBUSA assigns its rights, such assignment “shall not operate as a release of MB of its obligations” under the APA, including the sublease. (Id. (emphasis added).) Interpreted together with the previous sentence, this provision indicates that if MBUSA assigns its right and obligations, it would still remain obligated to Asbury on par with the assignee as the buyer under the APA, including the assumption of Asbury’s leasehold interest. The next sentence then clarifies this provision: “For avoidance of doubt, MB expressly agrees that it shall be primarily responsible for the performance under the Fresno Motors APA and the Sublease. Asbury acknowledges that MB may assign its rights and obligations under the Fresno Motors APA and the Sublease to a third party provided that MB remain primarily responsible for the performance of any such assignee with respect to the Fresno Motors APA and the Sublease. ” (Id. (emphases added).) When read in its entirety, this provision indicates that if MBUSA assigns its right under the APA, it would still remain “primarily responsible” under the APA and sublease as if it were the original buyer, such that the assignment “shall not operate as a release of MB of its obligations.” To remain obligated under the sublease would require MBUSA to remain obligated to Asbury, not to the Landlord.
Additionally, the fifth paragraph under the Acknowledgement Agreement, subtitled “Termination with Fresno Motors,”
In short, the Acknowledgment Agreement simply reiterates MBUSA’s existing obligations in exercising its right of first refusal under the APA: by exercising its right of first refusal, MBUSA stepped into the shoes of the buyer, Fresno Motors, and assumed the buyer’s obligations to Asbury, which included the obligation to assume the leasehold interest as either an assignment or sublease under the terms and conditions of the APA. Thus, from the examination of the Acknowledgment Agreement’s language in its proper context and circumstances, the Court does not find that the term “primarily responsible” is reasonably susceptible to mean a guarantee to the Landlord of Plaintiffs’ obligations under a sublease. Plaintiffs seize on the phrase that MBUSA shall remain “primarily responsible” in isolation, without proper regard to its context in the agreement, and more importantly, without properly considering to whom the guarantee is owed.
The Court next takes a preliminary look at the additional extrinsic evidence offered by the parties. Both parties rely on section 2787 of the California Civil Code, which states that a guarantor, which is used synonymous with a surety, is “one who promises to answer for the debt, default, or miscarriages of another.” Cal. Civ. Code § 2787. MBUSA also additionally relies on the definition that a guarantee contract “involves a direct promise to perform the obligation of the principal in the event that the principal fails to perform as required by his contract.” Pasternak v. Boutris,
Plaintiffs have not pointed to any further legal authority or extrinsic evidence that suggests that the term “primarily responsible” is reasonably susceptible to mean a guarantee to the Landlord. The only extrinsic evidence that Plaintiffs cite in support of its interpretation of the term “primarily responsible” is an email from Asbury’s counsel to MBUSA’s and Plaintiffs’ counsel on August 31, 2009, stating that it was Asbury’s belief that MBUSA promised to guarantee the sublease. (Pis.’ Supp. Opp’n, at 17, citing Nelson Deck, Exh. S.) Specifically, the email states:
Asbury was willing to allow ... assignment so long as MBUSA remained the primary responsible party with respect to the obligations under both the APA and sublease. This is all clearly provided for in the Acknowledgment [Agree*1313 ment] which is attached for convenience .... MBUSA has indicated that it will not be responsible for the assignee’s obligations under the APA and it will only be responsible for a very limited portion of the sublease obligations. That is clearly inconsistent with the terms of the documents, and any assignment without the benefit of a full guaranty is ineffective under the APA as assumed by MBUSA.
(Nelson Decl., Exh. S.) This communication is not relevant evidence of mutual intent. Rather, it is only evidence of As-bury’s de facto interpretation and understanding of the terms of the Acknowledgment Agreement well after the agreement was executed. Even if it is probative of Asbury’s subjective intent, as Plaintiffs suggest, (Pis.’ Supp. Opp’n, at 17), there is no evidence that Asbury expressed this intention to MBUSA at or near the time it executed the Acknowledgment. See Cal. Civ.Code § 1636 (“A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting....”); Shaw v. Regents of Univ. of Cal.,
Having examined the terms of the Acknowledgment Agreement and Plaintiffs’ extrinsic evidence for the purposes of deciding ambiguity, the Court determines that the term “primarily responsible” used in the context of the agreement is not reasonably susceptible to Plaintiffs’ interpretation. The Acknowledgment Agreement did not express a promise by MBUSA to provide the Landlord with a guarantee of the assignee’s performance under a sublease. Rather, as eponymously expressed in the title of the agreement, MBUSA and Asbury acknowledged their existing rights and obligations with respect to MBUSA’s exercise of its right of first refusal, including the obligation to assume Asbury’s leasehold interest. In the event of an assignment, MBUSA agreed to the status quo — i.e., to “remain primarily responsible,” (Ack. Agrmt. (emphasis added)), under the APA and the sublease. Such an obligation did not include a guarantee obligation to the Landlord. Plaintiffs latch onto the phrase “primarily responsible” in the abstract and impute a meaning onto the Acknowledgment Agreement that is unsupported by the language of the agreement, its context, or any extrinsic evidence. Plaintiffs cannot simply manufacture an ambiguity through obfuscation and isolated reading of contractual language and present that as a genuine issue of material fact. Because MBUSA did not conceal an agreement to provide a guarantee to the Landlord, Plaintiffs cannot prove the first
2. Duty to Disclose
Plaintiffs’ fraudulent concealment claim also falters under the second element of the claim. A duty to disclose a material fact arises under four circumstances: (i) where a fiduciary relationship exists between the parties; (ii) “when the defendant had exclusive knowledge of material facts not known to the plaintiff’; (iii) when the defendant “actively conceals” a material fact from the plaintiff; and (iv) when the defendant “makes partial representations but also suppresses some material facts.” LiMandri v. Judkins,
Plaintiffs do not contest MBUSA’s assertion that it was not in a fiduciary relationship with Plaintiffs. (Def.’s Mem. in Supp. Summ. J., at 9-10.) A fiduciary relationship exists where “confidence is reposed by one person in the integrity of another,” and arises in such contexts as trustee/beneficiary, directors and majority shareholders of a corporation, business partners, joint adventurers, and agent/principal. Wolf v. Superior Court,
Nevertheless, it is also undisputed that Plaintiffs and MBUSA were engaged in a transaction, as they were in the midst of negotiating the assignment of MBUSA’s rights and obligations under the APA, although Fresno Motors never executed the proposed Assignment and Assumption Agreement. A duty may therefore arise if MBUSA had “exclusive knowledge of material facts not known” to Plaintiffs; MBUSA “actively concealed]” a material fact from Plaintiffs; or MBUSA made “partial representations” but also suppressed some material facts. LiMandri,
MBUSA could not have fraudulently concealed a fact from Plaintiffs that they already knew or was disclosed to them. Because the fact that was purportedly concealed — MBUSA’s promise to Asbury to be “primarily responsible” for the sublease — was already disclosed to Plaintiffs under the APA, it was not within MBU-SA’s “exclusive” knowledge to implicate a duty to disclose this fact. Likewise, a party cannot actively or partially conceal a fact already disclosed, readily discoverable, and notorious. Accordingly, MBUSA did not have a duty to disclose the Acknowledgment Agreement under the remaining circumstances articulated in LiMandri. Plaintiffs therefore also cannot satisfy the duty element of fraudulent concealment, and MBUSA is entitled to judgment as a matter of law on Plaintiffs’ fifth cause of action for fraudulent concealment.
D. Unfair Competition (UCL)
Plaintiffs allege that MBUSA engaged in unlawful competition by: (i) aiding, abetting, and conspiring with Asbury in the breach of Asbury’s contractual obligations to Plaintiffs; (ii) providing unlawful notice, in violation of Vehicle Code section 11713.3(t); (iii) inducing Asbury to terminate its deal with Plaintiffs on June 19, 2009; and (iv) fraudulently concealing the Acknowledgment Agreement from Plaintiffs. (FAC ¶86.) Plaintiffs allege that such acts are “unlawful” and “unfair” within the meaning of the UCL, Cal. Bus. & Prof.Code §§ 17200, et seq. (Id. ¶¶ 87-88.)
The UCL prohibits an entity or an individual from engaging in “unfair competition,” defined as “any unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof.Code § 17200. The UCL provides a separate theory of liability under the “unlawful,” “unfair,” or “fraudulent” prong. Lozano v. AT & T Wireless Servs., Inc.,
Additionally, the Court agrees with MBUSA that Plaintiffs lack standing to bring a UCL claim because they have not properly alleged a basis for relief. (See Def.’s Mem. in Supp. Mot. to Dismiss, at 16-19.) Under the Constitution’s requirement for standing, the plaintiff must show an “injury in fact” that is fairly traceable to the challenged action of the defendant and likely to be redressed by a favorable decision. Lujan v. Defenders of Wildlife,
Here, Plaintiffs did not request injunctive relief in the FAC. Rather, Plaintiffs seek to recover, as restitution, “all sums actually paid to MBUSA, or by which MBUSA has benefitted, resulting from MBUSA’s unlawful, unfair and deceptive conduct” alleged in the FAC. (FAC ¶ 90; see also id., Prayer.) Plaintiffs allege that “these sums include, but are not limited to, benefits MBUSA derived from Plaintiffs’ evaluation, investigation and negotiation of the APA with Asbury, as well as benefits MBUSA derived from Asbury’s eventual sale of the Mercedes-Benz Fresno Dealership to another party after Asbury terminated the deal for a second time in October 2009.” (Id. ¶ 90 (emphases added).) A restitution order against the defendant, however, “requires both that money or property have been lost by a plaintiff, on
In the FAC, Plaintiffs do not allege any sums Plaintiffs or any other party paid to MBUSA. Nor do Plaintiffs identify any property or money lost that MBUSA has acquired or a benefit obtained by MBU-SA in which Plaintiffs have an ownership interest. Rather, Plaintiffs only allege benefits that MBUSA derived (i) from Plaintiffs’ evaluation, investigation, and negotiation of the APA with Asbury and (ii) benefits from Asbur/s sale of its dealership to another party. (FAC ¶ 90.) Such unspecified, intangible benefits are not recoverable in restitution — i.e., money, property, or benefits in which Plaintiffs had an ownership interest, as indicated by Plaintiffs’ own cited authority. See Korea Supply Co.,
In their opposition, Plaintiffs argue that “[t]he term ‘benefit’ denotes any form of advantage,” (Pis.’ Opp’n, at 16:26), but cite no legal authority for this rule. Plaintiffs rely on Troyk v. Farmers Grp., Inc.,
Moreover, as both parties agree, the disgorgement of what MBUSA has “benefited” as a result of its alleged unlawful and unfair acts, in itself, is not restitution. See Korea Supply,
y. CONCLUSION
For the foregoing reasons, MBUSA’s converted motion for summary judgment is GRANTED.
Notes
. In the Appendix to the APA, "manufacturer” is defined as "Daimler AG and any of its Mercedes-Benz subsidiaries.”
. The Declaration of Ryan P. Day ("Day Deck”) was submitted in support of MBUSA’s Renewed Motion to Dismiss. (Dkt. No. 30.)
. The Declaration of Gwen J. Young ("Young Decl.”) was submitted in support of MBUSA’s (Converted) Motion for Summary Judgment. (Dkt. No. 56.)
. All citations of undisputed facts are from MBUSA's Response to Plaintiffs' Separate Statement of Undisputed and Disputed Material Facts in Opposition to Defendant’s (Converted) Motion for Summary Judgment ("UF”). (Dkt. No. 68.) The Declaration of Dwight G. Nelson ("Nelson Deck”) was submitted in support of Plaintiffs’ Supplemental Opposition to Defendant’s (Converted) Motion for Summary Judgment. (Dkt. No. 63.)
. The declaration of Alton Burkhalter ("Burk-halter Deck”) was submitted in support of Plaintiffs' Supplemental Opposition. (Dkt. No. 62.)
. The declaration of Robert Woerner ("Woerner Decl.”) was submitted in support of MBU-SA’s (Converted) Motion for Summary Judgment. (Dkt. No. 56.)
. On September 17, 2009, after mediation and renegotiations, MBUSA agreed to a partial guarantee of Asbury's performance under the sublease. (FAC ¶ 61; Young Decl. ¶¶ 5-6 & Exhs. 4, 5 [Guaranty of Sublease].)
. Plaintiffs’ Request for Judicial Notice was submitted in support of their Opposition to MBUSA’s Renewed Motion to Dismiss. (Dkt. No. 43.) The Court takes judicial notice of Exhibit 1.
. On December 7, 2011, the District Judges of the Eastern District of California decided on a collective recusal of the District Judges for one year from the departure of former colleague and Judge of the Eastern District of California, Oliver W. Wanger (one of Plaintiffs' counsel in this action), in any case in which he appears as counsel, and referred the action to the Ninth Circuit Court of Appeals for reassignment to a District Judge of another district. (Ct.Order, Dkt. No. 39, Dec. 8, 2011.)
. In their ex parte application, Plaintiffs specifically requested an extension for limited discovery on the factual circumstances related to (1) MBUSA's allegedly untimely exercise of its right of first refusal under the California
. At the hearing, Plaintiffs' counsel requested that Plaintiffs' Supplemental Declaration of Dwight G. Nelson in Opposition to Defendant’s (Converted) Motion for Summary Judgment be admitted. The Court granted the request and admitted Mr. Nelson's declaration as Exhibit 1.
. Under California law, the elements of a claim for intentional interference with contractual relations consist of: "(1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” Pac. Gas & Elect. Co. v. Bear Stearns & Co.,
. Additionally, Plaintiffs rely on G & C Auto Body, Inc. v. Geico Gen. Ins. Co.,
. At bottom, the Ninth Circuit concluded that Shell’s action was "simply a refusal to deal with Marin Tug,” and was presumptively valid under California law, absent some unlawful element. Id. Here, too, MBUSA decided not to do business with Plaintiffs as assignees of the Fresno Dealership. The fact that MBUSA purportedly negotiated a secret agreement with Asbury is not, alone, actionable without some unlawful conduct by MBU-SA. See A-Mark Coin,
. While Plaintiffs point out that MBUSA has admitted that it was not a party to the APA, (Pis.’ Opp'n, at 5), that observation is consistent with the Court's conclusion, as MBUSA correctly stated in its opposition to Fresno Motor’s petition to compel arbitration that it was never a party under the APA with Fresno Motors, not that it was never a party under the APA with Asbury. (See Pis.’ Req. for Jud. Not., Exh. 2) [Def.’s Opp'n to Arbit. Pet.], at 6 ("What MBUSA does dispute is that it and Fresno were ever parties to the APA at the same time or, more importantly], with consideration or obligations flowing between MBUSA and Fresno Motors ... MBUSA instead replaced Fresno Motors as the buyer under the APA by virtue of its exercise, and agreed to be bound to Asbury, as the seller, to the terms of the APA, including the agreement to arbitrate any disputes under the APA with Asbury. MBUSA made no similar agreements with Fresno Motors.”). The Court takes judicial notice of Exhibit 2. Furthermore, at the March 23, 2012 hearing, Plaintiffs’ counsel stated that the issue of whether MBUSA was a "stranger” to the APA was decided by Judge Ishii in his order adopting Magistrate Judge Beck's findings and recommendations regarding the Fresno Motors’ petition to compel arbitration. Plaintiffs’ counsel, however, miseharacterized Judge Beck’s findings. Judge Beck did not deal with the issue of whether MBUSA was a stranger for the purposes of a tortious interference claim, but rather, observed that neither Fresno Motors nor MBUSA was a party or signatory of the original APA. (Findings and Rec. re Arbit., at 5.) Judge Beck concluded that Fresno Motor’s motion to compel arbitration should be denied on the ground that, inter alia, MBU-SA — by exercising its right of first refusal— stepped into the shoes of Fresno Motors as buyer of Asbury’s assets, such that "MBUSA became the sole buyer and there were no obligations flowing between MBUSA and Fresno Motors under the APA. Instead, MBU-SA agreed to arbitrate any dispute it may have with Asbury, not with Fresno Motors.” (Id. at 5-6.)
. In their opposition, Plaintiffs concede that a tortious interference claim cannot lie against MBUSA if MBUSA lawfully exercised its right of first refusal. (See Pis.’ Opp’n, at 15:18-19 ("The FAC does not seek to hold MBUSA liable for lawfully exercising a contractual ROFR.”).) As to MBUSA’s exercise of first refusal, the parties dispute the timing of MBUSA’s exercise, and the Court finds that this issue implicates contested facts that cannot be resolved on a motion for summary judgment. However, the Court need not decide this issue, as it has determined that, based on the undisputed facts, MBUSA was not a stranger to the APA, such that as a matter of law, it cannot be liable for tortious interference.
. See subsections 11713.3(a) (requiring reasonable delivery of vehicles and parts to dealer having a franchise); (b) (regulating changes to capital structure of a dealership); (c) (regulating changes in executive management of a dealership); (d) (prohibiting the prevention or requirement of transfer of dealer's interest, except as provided under subdivision t, and requiring dealer to obtain consent from manufacturer/distributor before transfer of interest and to notify manufacturer/distributor of decision to transfer interest); (e) (prohibiting the prevention of a dealer's receipt of reasonable compensation for franchised business and requiring dealer to obtain consent from manufacturer/distributor before transfer or assignment of franchise); (f) (prohibiting receipt of benefits from third person doing business with dealer); (g) (restraining certain types of agreement, provision, release, assignment, novation, waiver, or estoppel obtained from or enforced against a dealer); (h) (regulating price increases of motor vehicles ordered by dealer) (i) (requiring payment to dealer within a reasonable time after receipt of a claim); (j) (prohibiting denial of widow or heirs designated by a deceased owner of a dealership to participate in ownership or dealership); (k) (requiring same offer of inducements to dealers); (Z) (regulating franchise agreements); (n) (prohibiting denial of dealer's free association with another dealer); (o) (prohibiting competition with dealer under certain conditions); (p) (prohibiting unfair discrimination among franchisees with regard to warranty reimbursement); (s) (regulating warranty, rebate, or other incentives offered to the public or a dealer in connection with the retail sale of new motor vehicles); (u) (prohibiting unfair discrimination in favor of dealership owned or controlled by manufacturer or distributor); (v) (limiting access to information from a confidential dealer computer record) (w) (prohibiting interference with a dealer's ability to engage in certain acts by using electronic, contractual, or other means); and (x) (prohibiting certain unfair discrimination against a franchisee for not using manufacturer's or distributor’s product). The remaining provisions regulate the conduct of manufacturers or distributors without reference to existing or prospective dealers. See id. §§ 11713.3(m) (prohibiting unlicensed representative); (q) (prohibiting resale of vehicles to unlicensed persons); and (r) (requiring an identification number be affixed to a park trailer).
. The Court takes judicial notice of AB 2707 (Parata, Millar, McPherson & Polanco) Re: Automotive Franchise Law, attached as Exhibit 7 to Plaintiffs' Request for Judicial Notice.
. Amendments to the Vehicle Code in 1973 empowered the New Motor Vehicle Board to adjudicate certain “dealer-distributor'' disputes permitting the Board "to intrude upon the contractual rights and obligations of dealers and their product suppliers.” Mazda Motor,
. See A.B. 2707 (1998), attached as Exhibit 5 to Plaintiffs’ Request for Judicial Notice. The Court takes judicial notice of Exhibit 5.
. The Court takes judicial notice of the Assembly Committee on Transportation report of April 20, 1998 hearing on A.B. 2707, attached as Exhibit 6 to Plaintiffs' Request for Judicial Notice.
. This assertion is based on two alleged facts in the FAC that are undisputed: (i) the Landlord "would not agree to any form of a lease that did not include a guarantee from Asbury or MBUSA,” (FAC ¶¶ 55, 104), and (ii) As-bury, who "wanted out of its Mercedes-Benz Fresno Dealership premises lease,” "would not close the transaction without MBUSA’s guarantee of a Sublease if the landlord required Asbury to remain obligated under [its] Mercedes-Benz Fresno Dealership lease for the entirety of the leasehold term, including its two 10-year options” (id. ¶¶ 55, 104, 105).
. It is interesting to note that Plaintiffs' fraudulent concealment claim assumes the enforceability of the Acknowledgment Agreement, under which Asbury and MBUSA agreed that MBUSA timely exercised its right of first refusal on June 15, 2009. Such an assumption contradicts Plaintiffs' tortious interference claims under the first and second causes of action. Moreover, because Plaintiffs were not parties to the Acknowledgment Agreement, they would not have standing to enforce any of the agreement’s provisions against MBUSA.
. This retention of responsibility is entirely consistent with section 2.05 of the APA, which provides that a sublease would include “a personal guarantee of the Buyer’s principal and such principal’s spouse securing the obligations of the Buyer under such sublease.” (APA, at 3, sec. 2.05.) In the event of a sublease, Fresno Motors’ principals (i.e., Mr. Nelson and his spouse) were obligated to provide a personal guarantee to Asbury of Fresno Motors' performance of the sublease obligations. It does not mean, however, that Mr. Nelson would provide a guarantee of the sublease to the Landlord, as no contractual relationship exists between Mr. Nelson and the Landlord.
. Plaintiffs argue that their fraudulent concealment claim is further predicated on MBU-SA’s concealment of not only the terms of the Acknowledgment Agreement, but the existence of the Acknowledgment. (Pis.’ Opp’n, at 22, citing FAC ¶¶ 105, 106.) However, Plainliffs plead no allegation in the FAC as to the materiality of the mere existence of the Acknowledgment Agreement and whether but for MBUSA’s concealment of this fact, Plaintiffs would not have entered into negotiations with the Landlord.
. MBUSA's right of first refusal was also known or at least readily discoverable to Plaintiffs because it is codified in section 11713.3(t) of the Vehicle Code and explicitly referenced in MBUSA’s June 15, 2009 letter to Plaintiffs and Asbury stating that it was exercising its right of first refusal. (Letter; Nelson Decl. ¶¶ 13, 15 & Exhs. F-G; UF Nos. 11, 13.)
. Plaintiffs additionally allege a UCL claim based on the allegation that MBUSA conspired with Asbury "in the breach of Asbury's contractual obligations to Selma Motors and Fresno Motors.” (FAC ¶ 86.) A conspiracy "is not a cause of action, but a legal doctrine that imposes liability on a person who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.” Applied Equipment,